Misrepresentation

The concept of misrepresentation refers to the situation where a false statement of fact is made and is considered to be fraudulent if is is made either recklessly or with the intent to deceive, in keeping with the decision in Derry v. Peek (1889) 14 App Cas 337, HL, so anyone induced to enter a contract may then rescind the contract, claim damages or even both, according to S Pearson & Son Ltd v. Dublin Corpn [1907] AC 351, HL. Moreover, it is also to be appreciated that a contractor induced to enter a contract by reason of an innocent misrepresentation may also rescind the contract or claim damages.

Nevertheless, whilst the court has discretion to award damages in lieu of rescission, under section 2(2) of the Misrepresentation Act 1967, the measure of damages payable is generally the sum of money that placed the representee in the position they would have been in if the representation had not been made, supported by Gran Gelato Ltd v. Richcliff (Group) Ltd [1992] Ch 560. However, it must be recognised that a contractor who continues to act upon a contract after discovering a statement was false loses their right to rescind, accoridng to Long v. Lloyd [1958] 2 All ER 402, CA, so they will only be entitled to the price agreed under that contract, supported by Glasgow & South Western Rly Co v. Boyd & Forrest [1915] AC 526, HL.

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